Paul Ryan

Mr. RYAN of Wisconsin

Mr. RYAN of Wisconsin. Mr. Chairman, I demand a recorded vote.

Mr. RYAN of Wisconsin. Almost all regions in this country gain. On average, in this country, according to the fresh data we just got 15 minutes ago, we gain as a Nation.

Mr. RYAN of Wisconsin. Mr. Chairman, here is some fresh data we have from the USDA. Looking at the entire country, on average, if the USDA reforms go through, comparing the USDA reforms to the current status quo, they gain 57 cents, so the country, on average, not just the upper Midwest.

Mr. RYAN of Wisconsin. Mr. Chairman, will the gentleman yield?

Mr. RYAN of Wisconsin. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I will be very brief since I have 1 minute. The States that will not be affected by this amendment which fall at or below the $2.27 differential are California, Colorado, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, North Dakota, Nebraska, New Mexico, Nevada, much of New York, Ohio, Oregon, much of Pennsylvania, South Dakota, Utah, Washington, Wisconsin, West Virginia, and Wyoming. Now, the point is this, Mr. Chairman: what this amendment seeks to do is get a little bit of fairness in the system. If H.R. 1402 is going to pass, it will perpetuate the status quo, a system based on horse-and- buggy 1937 economics. We are simply saying let us at least put a little limit on the damage because one lives far away from Eau Claire, Wisconsin, one is going to get a higher price. One is still going to get a higher price the farther away from Wisconsin under my amendment; it is just going to cap it at the national average of the differential. The USDA said the national average under the USDA's plan will be $2.27. That is what this amendment seeks to achieve. Differences will still exist; they just will be limited.

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 30 seconds to the gentleman from Wisconsin (Mr. Green), the other cosponsor of this amendment.

Mr. RYAN of Wisconsin. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I would like to just add a correction to the gentleman from Alabama (Mr. Riley). The Southeast mailbox price is higher than the upper Midwest mailbox price. The Southeast mailbox price is $15.36, and the Midwest mailbox price is $15.27. Also, with due respect to the farmers in Alabama, we have already lost 50 percent of our farmers in Wisconsin. This has already gone. Mr. Chairman, I yield 2 minutes to the gentlewoman from Wisconsin (Ms. Baldwin).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I would like to thank the gentleman for saying this is a status quo bill. That is exactly right, this is a status quo bill. I would like to briefly explain what my amendment seeks to accomplish. What my amendment does, it would simply limit the amount of disparity between the highest and the lowest-paid producers in this country. This legislation would say that no producers would be entitled to a differential of more than $2.27 per hundred-weight Class 1 fluid milk. This amendment would try to restore some of the fairness and equity of the USDA's proposed reforms. The $2.27 is a simple average differential in the final rule proposed by the others, which is supposed to become effective October 1, 1999. Now, while I cannot support forcing dairy farmers in my State and nationwide to live with the status quo, as H.R. 1402 would do, I believe that this amendment would make an inequitable system more livable for the dairy farmers of the upper Midwest. The farmers in the State of Wisconsin and the Midwest have lived far too long under a system that rewards inefficiency in low productive regions and discourages production in regions that are best-equipped to produce dairy products. It is a nonsensical system that served a purpose during the Depression era, when we had the horse and buggy, but does not work in today's era, when we actually have a car. If we are going to ask farmers in my State and other upper Midwest States to continue living with this antiquated system, we have to give them some glimmer of hope that their hard work that went into reforming this system is not all for naught. These dedicated individuals should not be told that the work of the farmers in other parts of the country matters more than the work that they do. Wisconsin has seen the departure of 11,000 dairy farms between 1990 and 1998. I was talking to a colleague of mine just at the last vote who was from New York who was complaining that over the last 8 years that person lost 20 dairy farmers. Well, Mr. Chairman, in Wisconsin we lost 20 dairy farmers in the last 5 days. Family farms are at stake here more than ever in Wisconsin and Minnesota. Mr. Chairman, this amendment sends basically a strong message. It sends the message that farmers throughout this country should be rewarded with reasonable, equitable differentials. Currently, producers in Florida are rewarded with the differential payments that are twice as much as producers, say, in Minnesota are being paid. How can this kind of a system be justified? A farmer in, say, south Florida, outside of Miami, is going to get twice the differential that a farmer doing the same job, having the same kind of herd, is doing in Minnesota? If we really believe that in Florida it costs twice as much to milk a cow than it does in Minnesota, we owe it to the consumers of America to explain why this Congress would support paying a farmer in Florida twice as much to stay in business. This makes about as much sense as it would paying farmers in my district four times as much as the Florida orange growers to raise oranges. But we do not grow oranges in Wisconsin because we know we have tough winters, and it would not be a good idea. It makes about as much sense as paying Wisconsin farmers $3 extra per pound over the growers in Georgia for peanuts. Out of fairness and equity, I would ask my colleagues to support my amendment. It does not completely throw out the order system, it simply provides reasonable limits for differential payments set at the average differential of $2.27, so there will be differences. There will be more in some regions, versus in others. It is just not an incredible amount. Mr. Chairman, I reserve the balance of my time.

Mr. RYAN of Wisconsin. Mr. Chairman, this amendment does not seek to do anything against the co-ops. It is not an anti-co-op amendment. It is a pro-farmer amendment. Since 1995, since we have been reporting mailbox prices, the following areas have consistently received less than the federal order blend price; the Southeast, the Southwest plains, Texas and the Great Basin regions. In most cases of these underpayments, they occur in an area where there is little competition for milk. In other words, there is basically one predominant cooperative. This is especially the case in the Southeast, in Texas and the Southwest plains where producers have few, if any, alternative markets. Now, as cooperatives continue to consolidate there is a greater likelihood that dairy producers will receive less than the blended price, less than the price at the minimum. Now, this is the case. The gentleman from Maine (Mr. Baldacci) is right in saying that sometimes farmers do not have any choice but to go to a co-op. Well, that monopoly and the ability to pay less the minimum price is precisely what is going on at the bottom line of American dairy farmers who are in the co-ops. So what we have in place today is a system where the beautiful irony of this bill, where we are trying to raise differentials for the very farmers in these co-ops, we have the co-ops who are paying below the minimum prices. It is because the farmers have nowhere else to go but to the co-op. All we are saying with this amendment is, make sure the farmer who is in the co-op, who has nowhere else to go but the co-op, gets at least the minimum price for the milk they produce. Now, the co-ops will say they need to pay below minimum prices for other needs, for other expenditures. Well, that is a very fuzzy, very gray area. We do not know where that money is going. We do know that that money is not going to the farmers who are enrolled in these co- ops. The beautiful irony is this: this debate is about trying to fight for more money, more differentials, for dairy farmers in the co-ops. Yet we are supporting a system today that allows them to get less than the minimum price in the co-ops.

Mr. RYAN of Wisconsin. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, let me address some of the points my colleague, the gentleman from California, just mentioned. The current law we have, which has been in place for 62 years, has been the primary reason why we have lost 11,000 dairy farmers in Wisconsin since 1990. We have heard a lot over the last few months about giving farmers the ability to manage their own risk. Farming is a very volatile industry. There are ups and there are downs, and we need to help farmers have the ability to manage their own risk, to make sure that they can survive from year to year. This is what it comes down to. The coops can forward contract, so a farmer in a coop has that ability. The coops have a government- sanctioned competitive advantage over all other processors: They can forward contract. If we look at the coop literature, we will see they promote forward contracting as a wonderful tool of risk management. What the Stenholm-Pombo amendment seeks to achieve is to stop anybody else from offering forward contracts. The coops want to keep their competitive advantage, so they are the only ones who can give forward contracts to the dairy farmer. What we are trying to achieve by defeating the Stenholm-Pombo amendment and by passing the Dooley amendment is simply this: Let the farmer decide if they want to or who they want to forward contract with. If for one reason or another a farmer does not join a coop, a right they have today, why should we be denying them the ability to forward contract, which is the best management tool they have in their arsenal? What we are doing if we pass the Stenholm-Pombo amendment and defeat the Dooley amendment is basically telling that dairy farmer who for one reason or another is not in a coop, you are out of luck. You cannot forward contract. Forward contracting, as I think everyone is acknowledging here on the floor debate, is an excellent tool of risk management. The coops are very big and they are getting bigger. I support coops. I have many in my district that I represent. However, as we are going to discuss in a future amendment, coops are not required to pay the minimum price for milk to their producers. So we have a system whereby the coops have a competitive advantage, being the only ones who can offer forward contracting, but it is also very interesting to note that the coops do not have to pay the minimum price of milk to their own producers. So our farmers are being put into a catch-22. If they want this risk management tool, they have to join the coop. If they join the coop, they very well will not get the minimum price of milk. They might get prices below the minimum prices. What we are trying to do is liberalize and give more freedom to the dairy farmer, give them the chance to self-contract, forward contract, on their own.

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Dooley).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2 minutes to the gentleman from Minnesota (Mr. Gutknecht), a champion in the milk marketing reform debate.

Mr. RYAN of Wisconsin. Mr. Chairman, I offer an amendment.

Mr. RYAN of Wisconsin

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 3 minutes to the gentleman from California (Mr. Dooley).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2 minutes to the gentleman from Virginia (Mr. Goodlatte).

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2 minutes to the gentleman from California (Mr. Royce).

Mr. RYAN of Wisconsin. Mr. Chairman, I rise to claim the time in opposition to the amendment.

Mr. RYAN of Wisconsin. Mr. Chairman, yes. I apologize. I thought that is what I had said. The point is it is understandable that the proponents of H.R. 1402 disregard the vote that just took place by the farmers in August. So what we are simply saying is, okay, let us have a real vote; let us have a vote with the dairy farmers to choose whether or not they want 1402 before it is implemented, before it is passed down on to the farmers with no say-so.

Mr. RYAN of Wisconsin. Mr. Chairman, it really comes down to this: proponents of H.R. 1402 are saying that the vote that happened in August was a cooked vote, that it was not an honest vote, that they did not get all the choices to vote on what they wanted. Well, that is what we are trying to give. Let us be very clear about what 1402 does with the latest self-executing amendment. It denies the farmer any choice as to their fate. It says that H.R. 1402, the status quo, will be crammed down their throat with no say-so, no plebiscite, no choice from the farmer. What this amendment simply does is it lets every individual farmer, not the co-ops, not the processors, not the big businesses, the farmers get to choose do they want it. Well, the vote that took place in August was one that passed with overwhelming majority. It was a choice between the USDA's rule and Option 1-B. I understand the proponents of 1402 disregard this vote, so we are coming to them with another vote. If 1402 is what my colleagues think all the farmers in this country want, then they should not be afraid of letting them decide themselves whether they want it. Let us move this debate beyond the Beltway, beyond the co-ops and go directly to the people.

Mr. RYAN of Wisconsin. Mr. Chairman, may I inquire as to the time remaining.

Mr. RYAN of Wisconsin. Mr. Chairman, a lot of folks have been calling our office, other Members that do not represent dairy States, asking what is going on here. Well, I would like to give Members who do not represent dairy States a little insight as to what this whole pricing formula is all about. If Members think our Tax Code is complicated, wait until they look at dairy. Out of the Code of Federal Regulations the method for determining the basic formula price for milk and the blend price is as follows: The basic formula price for milk equals last month's average price paid for manufacturing grade milk in Minnesota and Wisconsin plus current grade AA butter price times 4.27 plus current nondry milk price times 8.07 minus current dry-buttermilk price times 0.42 plus current cheddar cheese price times 9.87 plus current grade A butter price times 0.238 minus last month's grade A butter price times 4.27 plus last month's nondry milk price times 8.07 plus last month's dry-buttermilk price times 0.42 minus last month's cheddar cheese price times 9.87 plus last month's grade A butter price times 0.238 plus present butter fat minus 3.5 times current month's butter price times 1.38 minus last month's price of manufacturing grade A milk in Minnesota-Wisconsin times 0.028. That is the basic formula price. Now let us go to the blend price, which gets us closer to what the farmer actually gets. The blend price is the basic formula price plus .12 times percent of milk used for cheese and powder and butter plus basic formula price plus .30 times percent of milk used for ice cream and yogurt plus the basic formula price plus 1.04 plus .15 times the distance from Eau Claire, Wisconsin, divided by 100 times the percent of milk used for fluid milk. My colleagues, this is the pricing formula set in law 62 years ago; and this is what we are living under now. The USDA is proposing very modest reforms toward a market-based system so that farmers can farm based on their own merit, not based on where the heck they live in proximity to Eau Claire, Wisconsin. This is the formula. This is how they determine how a farmer basically gets the price for milk. This is more complicated than our U.S. Tax Code, yet the proponents of H.R. 1402 want to keep this price system in place. That is what this debate is about. When we listen to these numbers about $200 million being lost, those are bogus numbers. The USDA, the Food and Agricultural Policy Research Institute concluded on consensus numbers that, at worst, farmers are going to lose $2.8 million a year but, on average, 60 percent of America's dairy farmers are going to do better under the USDA's plan. So this $200 million figure, Members should not believe the hype. At worst they are going to lose $2.8 million. The decimal point needs to be moved a couple slots to the left.

Mr. RYAN of Wisconsin. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Wisconsin (Mr. Kind).

Mr. RYAN of Wisconsin

Mr. RYAN of Wisconsin. Madam Speaker, I thank the gentleman from New York for his inherent fairness. But what is unfair is the current milk pricing system we have in this country today. The farmers of Wisconsin, the farmers of my district, the First District of Wisconsin, are suffering because they live too close to Eau Claire, Wisconsin. They are not suffering because they run a shoddy operation or it is inefficient. No, they are suffering because they live too close to Eau Claire, Wisconsin. Does that make sense to anybody? We are losing more family farms in Wisconsin than many of my colleagues have in their States in totality. The USDA reform initiative is a small step to alleviate a situation that has been plaguing dairy farmers in the midwest for far too long. This system needs to be reformed not because it unfairly penalizes the midwest dairy farmers but because it hurts taxpayers and consumers. They are being asked to subsidize inefficiencies in the production of dairy product. They are being asked to pay for a program that continues to waste their taxpayer dollars. They are being asked to pay higher prices at the supermarket. We are no longer giving farmers in certain areas of the country an incentive to produce milk. We are now giving them an incentive to overproduce milk. That is where we are today. This type of system does not provide an incentive for farmers to operate efficiently or produce items that are natural to their agricultural environment. If this bill passes, we will be silencing the voices of millions of farmers around the country who have already been heard on this issue by the USDA and deserve a right to vote on this reform. This reform in this August was supported by over 95 percent of farmers nationwide. If we pass this bill, we are rolling back that mandate. I urge a ``no'' vote on this bill.